Digital Currency Group and Failed Crypto Company Genesis Agree in Principle With Creditors

Cryptocurrency Its subsidiary Digital Currency Group (DCG) and its bankrupt subsidiary Genesis have agreed in principle with a group of Genesis’ main creditors on the terms of the restructuring plan, according to a source familiar with the matter.

The source said the deal, which begins to resolve some of the key issues that led Genesis to enter Chapter 11 bankruptcy protection, includes the sale of the bankrupt Genesis entities, as well as the closing of the Genesis credit book.

The Fate of $100 Million Bitcoin Will Be Determined in the Agreement Between DCG and Genesis with Creditors

The source said the specification also includes refinancing the outstanding loans DCG borrowed from Genesis for $500 million in cash and nearly $100 million worth of Bitcoin (BTC).

The source, who did not provide details of the process, said, “This includes the liquidation of the 10-year bond that DCG gave to Genesis in exchange for bankrupt hedge fund 3AC receivables.” The bill was given to Three Arrows Capital (3AC), a crypto hedge fund that collapsed last year, for $1.1 billion.

The creditor group is negotiating on behalf of companies and individuals with approximately $2.4 billion in claims against crypto lender Genesis. The group is represented by law firms Proskauer and Kirkland, as well as restructuring expert Houlihan Lokey.

The source said the proposed deal will be made available to other creditors, including hundreds of thousands of customers of the Gemini Earn lending product.

Genesis’ lending arm stopped withdrawals on November 16, 2022, after crypto exchange FTX crashed earlier that month. Genesis’s lending units filed for bankruptcy protection in New York last month.

*Not investment advice.

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